Mba/540 – Maximizing Shareholder Wealth Essay

1934 words - 8 pages

Problem Solution PAGE \* MERGEFORMAT 9
Running head: MERGER-SHANG-WA ELECTRONICSProblem SolutionTabitha W. PurifoyUniversity of PhoenixWeek Six - November 3, 2008MBA/540 - Maximizing Shareholder WealthBill StokesBased on the scenario for Lester Electronics, Inc. we determined the company is heading in a new direction. Implementing the new vision began with the decision to merge LEI and Shang-Wa and will trickle down to employees to increase sales. While opposition is not an issue for the companies, a hostile takeover threat could conquer the efforts of merger completion. Efficient financing options will enable the new consolidated company to explore all avenues logically feasible and proceed to initiate the required steps. The overall outcome will be beneficial to the company, the employees and the shareholders.Issue and Opportunity IdentificationLester Electronics (LEI) has been the sole distributor of capacitors for the consumer and industrial products manufactured by Shang-Wa. LEI never marketed this product outside the United States and managed to achieve and maintain annual revenue of $500 million. Shang-Wa allows LEI to renew this contract annually with the stipulation of purchasing $1 million wholesale for 65 years.This agreement works well for both companies until recently when an offer was made by a competitor called Transnational Electronics Corporation interested in acquiring LEI. Due to growing demand Shang-Wa realizes more work is required although Mr. Lin is reaching his peak and prepares for retirement. In order to walk away from his company; Mr. Lin wants to ensure LEI is able to purchase this company and continue the growth opportunities currently in place.LEI has decided to merge with Shang-Wa, as a stable and profitable company this merger will give Shang-Wa the finances required to remain competitive. One financing problem presented is the rate of growth for LEI compared to Shang-Wa, a basic rule to acquisition evaluation is to ensure NPV to shareholders is positive. Mergers do not always transpire amicably; in this paper I will show how LEI and Shang-Wa moving full force with this merger. An immediate challenge of this merger is ensuring the occurrence completes prior to a hostile takeover. This is an important opportunity for both companies to achieve their desired results. In an effort to gain the backing of the shareholders is to purchase the firms common stock in exchange for cash, shares of stock and other securities'. (Ross-Westerfield, Jaffe, 2004, p 797). LEI will be required to move quickly and efficiently to avoid a hostile takeover which could involve a tender offering to the shareholders. LEI can purchase the assets of Shang-Wa as one way to avoid potential conflicts with the company shareholders. This alternative would not be a likely choice because it could become more costly and take much more time to accomplish in order to get clear title to all assets; in light of the other suitors in the case.If LEI was...

Find Another Essay On MBA/540 – Maximizing Shareholder Wealth

Essay topic: Shareholder value provides a comprehensive framework for evaluating strategic and tactical marketing decisions

1741 words - 7 pages business strategic and tactical decision-marking. The shareholder value as definition is the value that was contributed from the company which shareholders invest money in. Shareholder value has especial significance in relation to an organization and its business activities. The only reason for maximizing shareholder value is because of offer high return to shareholder will be bring more investment or contribution. If company did not offer any wealth

The Role of the Financial Manager

679 words - 3 pages company doesn't run out of the cash necessary for continued, day-to-day operations and planned growth strategies. Within these areas fall decisions such as which short-term and long-term investments should the company engage in? And how will the company finance these investments? (See Exhibit 1 for a simplified organizational chart of a corporation.)All of these decisions should be made with the intent of maximizing shareholder wealth. However, this

Lester Electronics Wealth Maximization Concepts Worksheet

897 words - 4 pages McGraw-Hill CompaniesRoss, Stephen A., Westerfield, Randolph W., Jaffe, Jeffrey (2005) Corporate Finance 7eCh 2 p 1 McGraw-Hill CompaniesRoss, Stephen A., Westerfield, Randolph W., Jaffe, Jeffrey (2005) Corporate Finance 7eCh 1 p15 McGraw-Hill CompaniesUniversity of Phoenix Scenario (2008) Company Overview MBA 540 MaximizingShareholder Wealth Retrieved October 6, 2008 from

Problem Solution: Lester Electronics

5324 words - 21 pages 1 , 2007, from of Phoenix. Scenario One: Lester Electronics. Retrieved on October 14, 2007, from University of Phoenix, Week One, and rEsource. MBA 540-Maximizing Shareholder Wealth. http://mycampus.phoenix.eduUniversity of Phoenix. Scenario Two Lester Electronics. Retrieved on October 14, 2007, from University of Phoenix, Week One, and rEsource. MBA 540-Maximizing Shareholder Wealth. http

Assessing the Goal of Sports Products, Inc.

1121 words - 4 pages , management of Sports Products, Inc. should pursue maximizing shareholder wealth as its overriding goal. The current objective of Sports Products, Inc. has been to maximize profits, but "profits do not necessarily result in cash flows available to the stockholders" (Gitman, 2006, p. 15). Owners only receive cash flow when receiving dividends or selling their shares for a higher price than when first purchased; Sports Products, Inc. has failed to pay

Profit and Shareholder Wealth Comparison Paper

922 words - 4 pages will also help understand which company has provided greater shareholder wealth creation. The calculation of net profit will help identify which company has done a better job of maximizing profits. From those analyses, the strategy of each company regarding the risk to the shareholder’s investments will be clarified.Today, GE is “11 technology, services and financial businesses with more than 300,000 employees in 160 countries around the

Risk Analysis on Investment Decision

840 words - 3 pages Risk Analysis PAGE 5 Running head: RISK ANALYSIS ON INVESTMENT DECISIONRisk Analysis on Investment DecisionKatrina WhiteUniversity of PhoenixMBA/540 - Maximizing Shareholder WealthNovember 10, 2008Oscar Lewis, InstructorRisk Analysis on Investment DecisionSilicon Arts Incorporated, a four-year old high tech firm with annual sales turnover of $180 million, has a two point agenda, which is to increase market share and keep pace with technology

Profit and Shareholder Wealth Comparison

878 words - 4 pages = 3.51For TYCO:(2,019 X $27.15) $34,186 = 1.60Based on these market-to-book ratios, TYCO's strategy has provided greater shareholder wealth creation. This is evident by the smaller market-to-book ratio. Both are greater than one, so each company's stock is overvalued. However, GE's is more overvalued, providing for less potential shareholder wealth creation. TYCO has utilized more of the investment to develop more value into the company.Average

Profit and Shareholder Wealth Comparison Paper: General Electric and Tyco

862 words - 3 pages GE's (32.1 percent)and Tyco's (18 percent) market to book ratios along with their rate of return on equity this shows that General Electric (18.65 percent) has done a much better job than Tyco (11.74 percent) of providing greater shareholder wealth creation. The market-to-book ratio provides one measure of shareholder wealth created by each company. This ratio can be calculated by dividing each company's market capitalization by that company's

Ethics and Social Responsibilities

701 words - 3 pages corporation is to maximize shareholder wealth, management should take any action necessary to achieve this goal so long as no law is violated" rings true for many corporations. Maximizing profit allows for growth and possible implementation of business ethics after survival of the corporation is no longer a concern.Social ImpactIn contrast to the economic impact of the above ethical statement, the social impacts are very different. Many

Shareholder Concept versus Stakeholder Concept: The Impact of Corporate Social Responsibility on Profit maximization

9403 words - 38 pages , 2006, p. 284). According to McWilliams and Siegel (2001) some managers enthusiastically allocate resources to support CSR while others reluctantly devote resources to CSR since it is believed to be inconsistent with the firm's goal of maximizing shareholder wealth (p.117). Similarly, Kolstad (2007) posited that although a growing number of firms are focusing on CSR, the primary purpose of most firms is not promoting social welfare, but increasing

Similar Essays

Strategies For Maximizing Shareholder Wealth Essay

6767 words - 27 pages University of PhoenixWorking Capital Management Strategies - Shell OilShell working capital management strategy is so effective and efficient that it reflects strongly the healthy financial balance sheet, higher share price, effective operating cash flow and higher refining and marketing profits, couple with an efficient performance from their chemical and power units help overall profits thereby maximizing shareholders wealth. Despite its lower

Gap Analysis: Lester Electronics

3252 words - 13 pages :// of Phoenix. (2007). Scenario: Maximizing Shareholder Wealth. Retrieved October 19, 2008, from University of Phoenix, Week Three, rEsource. MBA 540 Scenario 2 website.Table 1Issue and Opportunity Identification Issue Opportunity Reference to Specific Course Concept (Include citation) Concept Transnational Electronics Corporation (TEC); is interested in acquiring Shang-Wa

Problem Solution: Lester Electronics, Inc Mba 540 Week 6

2593 words - 10 pages Shareholder Wealth. http://ecampus/phoenix/edu/secure/resource/resource/aspScenario, (2007). Lester Electronics, Inc. Retrieved January 15, 2009, from University of Phoenix, rEsource, MBA/540-Maximizing Shareholder Wealth.http://ecampus/phoenix/edu/secure/resource/resource/aspWesterfield, (2004). Corporate Finance. The McGraw-Hill Companies, Retrieved January 17, 2009 from University of Phoenix, rEsource, MBA/540 Maximizing Shareholder Wealth.http

Lester Electronics Problem Solution Essay

4317 words - 17 pages October 22, 2008,from University of Phoenix, Week One, MBA/540 - Maximizing Shareholder Wealth.University of Phoenix. (2006). Scenario two: Lester electronics. Retrieved November 12, 2008,from University of Phoenix, Week Four, MBA/540 - Maximizing Shareholder Wealth.Weber, H. (2007, January 31). US Airways Withdraws Bid for Delta. Washington Post.Retrieved From http://www.washingtonpost.comTable 1Issue and Opportunity